Will Martha Stewart's pricey taste hurt JC Penney?

The domestic diva is reportedly insisting on high-end materials for her line of home products, raising profit concerns for the struggling retailer.

By Aimee Picchi Feb 18, 2013 11:15AM

Customer Service counter at the J.C. Penney store in Westminster, Colorado on February 20, 2009 (RICK WILKING/Newscom/RTR)Martha Stewart is known for her high-end tastes, blogging to her fans about the pleasures of "thick and fluffy Turkish towels" and "finely ironed linens."


But her passions are on a collision course with retailer J.C. Penney's (JCP) need to turn a profit, reports The New York Post


At issue is a deal Penney struck with Martha Stewart Living Omnimedia (MSO) to sell household products branded with Stewart's name, as part of the retailer's strategy to lure new shoppers. 


Stewart is insisting that her products for J.C. Penney incorporate high-end materials -- such as top-quality fabrics and packaging components -- leading to concerns among its executives that the retailer will lose money on the goods, the Post notes.


Despite those fears, J.C. Penney CEO Ron Johnson is backing Stewart, according to the report. As a result, the new products' costs have jumped as much as 30% above their replacements. 


The report comes at a delicate time for Penney: A lawsuit brought by Macy's (M) against Martha Stewart Living Omnimedia over its deal with J.C. Penney is set to go to trial on Wednesday, according to Reuters


At J.C. Penney, Stewart's name will appear on rugs, window coverings, as well as Martha Stewart Pantry, a line of food mixes, and Martha Stewart Celebration, which are paper party products, according to The Dallas Morning News. The retailer will also sell a private label called Everyday, ranging from linens to furniture, that will be designed by Stewart's company. 


While Penney originally hoped to sell Stewart's products on March 1, that's been delayed until Mother's Day, or May 12, Home Textiles Today notes.


According to the Post, Stewart insisted her cutlery include high-grade stainless steel, and demanded that the glassware come from Europe instead of China. J.C. Penney's won one battle, when executives vetoed fabric from a supplier to Frette, whose Egyptian cotton bedsheet sets can cost over $1,000


With most U.S. consumers struggling with smaller paychecks as higher payroll taxes took effect in January, the big question for J.C. Penney is whether its customers will pay up for Martha Stewart quality. 


More on moneyNOW

Tags: Retail
243Comments
Feb 18, 2013 2:56PM
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Dump Martha Stewart, it's all over priced junk! How about a line of MADE IN THE U.S.A. products that will provide jobs in our own country & will improve JCP image with consumers?
Feb 18, 2013 2:28PM
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They should just dump Martha!  I won't buy anything with her name on it! 

I'll go elsewhere for my purchases.

Feb 18, 2013 2:22PM
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Why does it seem everything Martha Stewart seems to get involved with has issues, Take KMart/ Sears, then at stab at Target, now Penny's. Does anyone think maybe people want everyday affordable things that they don't feel bad about replacing every few years, than hundred dollar items that still need replaced, but hate to realize they wasted money on a name.
Feb 18, 2013 2:17PM
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Wow what next will JCP come up with next to lure back customers.  I don't think adding Martha Stewart's  name on anything will help JCP's image and will not bring back former customers.  It is sad that JCP has lost their appeal and redesigning their stores did nothing to help their down hill slide. 

Feb 18, 2013 2:37PM
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One of the reasons JC Penney is tanking is that the market for cheaply made products at cheap prices is already saturated and JC Penney has decided to try and compete with Target and Walmart in that arena instead of staying in the quality products at affordable prices niche they used to occupy. Their beef with Martha is just another symptom of the cheapening of the brand and a misunderstanding of their place in the market. There isn't a lot of department store retail in the middle for people who don't care about designer brand names but want better quality than the disposable clothing from Walmart, and that's where they should have stayed. 
Feb 18, 2013 1:52PM
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I had a 30-year career with jcp.  Assignments in both the field and Corp HQ and I was fortunate enough to be able to get out of jcp last year while the 'getting out was good'. 

I realize that times change and businesses need to be proactive in regards to those changes.  But I view the last 18-months of jcp 's actions as the company being led by the gang that couldn't shoot straight. 

Feb 18, 2013 2:30PM
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She has products  in K mart & Walmart too. I really don't look for anything with her name on it.
Feb 18, 2013 1:01PM
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JC Penney has more problems than Martha Stewart.
Feb 18, 2013 12:29PM
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Ha, Martha Stewart's snobbery...don't need that.
Feb 18, 2013 1:12PM
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Wasn't Martha at K-Mart? That's about the caliber of her products. If they try to "Upgrade" the stuff and stick higher price tags on it, Penney's customers won't buy it, there are much better values other places. Then again, you can be 99% assured that Penney's will be out of stock on that like they are on everything else.....
Feb 18, 2013 2:44PM
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I have a couple of Martha Stewart towels and they don't get me any more dry when I step out of the shower than any other towel....imagine that.
Feb 18, 2013 2:33PM
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J.C. Penney desperately needs to overhaul their in-store customer service experience. I've never seen anything worse for a department store. Then it needs to cut ties with Martha Stewart, whose name no longer denotes class or sophistication. Perhaps maybe, just maybe, it could then turn itself around.
Feb 18, 2013 2:43PM
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J.C. Penny needs to turn its marketing strategy focus back to the things that kept its loyal customers before all of the high-end ****.
Feb 18, 2013 2:15PM
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who doesn't carry Martha Stewart? didn't she also have a deal with kmart?

Talk about overdone.

 

Feb 18, 2013 2:05PM
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You want to succeed? Fire the CEO of Penney's then get rid of Stewart as she is a crook already and you don't need her expensive junk in the store. Last but not least, clean up your image, and having DeGeneres represent the store is not the way to do it.
Feb 18, 2013 2:39PM
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I don't but her stuff anyway, I didn't buy it when she had it at Kmart.
Feb 18, 2013 2:24PM
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Jc Penny's sucks,all ttheir stuff is junk at high prices,Stewart prices are junk at higher prices
Feb 18, 2013 2:33PM
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I have been going back to Penny's, but I will not be buying Martha's household goodies.  They are always more expensive and a single mom can't afford them.  Those are what I call AKL's....After the Kids Leave Stuff.
Feb 18, 2013 2:48PM
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That "Convict" deserves no media time. I say good day sir, good day!
Feb 18, 2013 1:32PM
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Maybe Pennys should have one section or third floor space of stores devoted to nicer items..

 

Don't need Martha Stewie; Yup, she did a lot for K-Mart..

 

Kind of divide off the other Section, then turn the rest off the store into a Target, Costco and WalMart.

Otherwise, we or many are going to "stick a fork in them"...We always liked Pennys..

But they have to change and survive, now; And do whatever it takes..?

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